A RAY of hope beckons Zimbabwe’s homeless and the construction industry that has endured a four-year economic recession as retail banks are now taking advantage of the new Banking Act to venture
into mortgage lending.
Mortgage lending, once a preserve for Zimbabwe’s five building societies before the promulgation of the new Act, has been opened to banks as the authorities move to improve the appalling provision of housing.
Zimbabwe has four building societies – Central Africa Building Society, Beverley, Intermarket Building Society and First National Building Society (FNBS). Intermarket and FNBS are under the management of a curator.
Last week, Time Bank of Zimbabwe Ltd joined the battle to clear the ballooning housing backlog, creeping towards two million people.
A spokesperson for the bank invited prospective homeowners to invest between $20 million and $100 million in a housing investment scheme that gives them the choice to own a residential stand after six months, redeem the investment or roll it over.
Between the first deposit and the date of maturity, Time Bank, which will apply market-linked interest rates on savings, would organise facilities to lock the prices of residential stands offered and safeguard the investor against the vagaries of inflation.
Eric Bloch, a Bulawayo-based analyst, said the initiative by Time Bank was a step in the right direction, but called for other financial sector players to join forces.
Never before has it become more compelling for the private and public sectors to pull together given the donor fatigue facing Zimbabwe at the moment.
For instance, the US$43 million Urban Development Loan doled out by the World Bank in 1984 to support the provision of housing dried up in 1993. USAid, an aid agency, has also cut back on its funding towards housing development.
“The construction industry will benefit a lot from investment in housing, and so will companies producing building materials and building contractors,” said Bloch.
“The economy as a whole will benefit, because people will stop worrying about shelter once they have access to own houses. And so productivity at workplaces will improve.”
Analysts said the private and public sectors needed to move with speed in rolling out residential stands and houses before the housing crisis afflicting Zimbabwe’s major towns and cities gets out of hand.
They said a health disaster has been simmering underneath because of the crisis that has led to acute overcrowding, strained water and sewerage facilities.
Harare alone has an estimated housing backlog of one million people, while Bulawayo, the country’s second largest city, has 200 000 people on its housing waiting list.
The overwhelming demand for accommodation has pushed rentals beyond reach, threatening to derail inflation targets. More than 10 informal settlements have mushroomed in Harare in as many years, with the oldest settlement being Hatcliffe Extension formed in the 1990s.
Analysts said the initiative by Time Bank offered hope for the homeless who have spent years hoping to be allocated residential stands.
It also complements efforts being pursued to address housing crisis, analysts say. They say the major constraint has been funding, but even where funding had been made available, prospective homeowners have not been able to save.
The failure to save is blamed on inflation, which has eroded returns on hard-earned income against the backdrop of relentless increases in construction costs.
As a result, Zimbabweans in the diaspora got the better of the locals by taking advantage of the disparity between the official and parallel market exchange rates, which has since narrowed because of efforts by the central bank to crack down on wayward activities.
An opportunity has now presented itself, said analysts, for locals to participate in property purchases. But more important are the opportunities that would arise in the construction industry, where scores of jobs would be created.
An official with the Association of Building Societies of Zimbabwe (ABSZ) said the availability of land and the delays in project approvals were some of the constraints affecting housing delivery.
“The ability to facilitate housing schemes is currently limited by difficulties in raising affordable funding under the current adverse macro-economic environment.
“The provision of bridging finance for developers and contractors falls more appropriately within the scope of commercial banks, but banks tend to shy away from these demands because of the lack of security and the high risks involved,” said the ABSZ official.
David Hinkins, the director of non-governmental organisation Heritage Zimbabwe, is on record as saying the fragmented approach by the government, the private sector and NGOs had constrained housing delivery.
“We need to pool resources and focus our attention at finding ways to overcome spiralling building costs, which make it difficult for low-income earners to build houses on their own,” he was quoted saying.